Growth in the South West was 1.9% in the year to June 2019, according to estimates from ESCoE, ranking the region third (out of twelve UK ‘regions’). The drop from the previous quarter’s growth of 2.3% suggests the region’s economy is contracting. At 2.3%, London had the best performance with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, falling growth in the South West reflects this and is similar to other regional economies which have also shrunk.
Unemployment in the South West increased by 10,000 to 79,000 between April and June, an uplift of 0.3% to 2.7%, the lowest rate in the UK. The North East had the highest at 5.3% with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5% which compared with 76.1% in the UK, the joint highest since comparative records began in 1971.
In June, South West average earnings increased from £571 to £603 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.
The South West’s average property price fell during the month, the 0.4% drop to £252,122 meant prices have fallen by 0.2% annually. In comparison UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.
On interventions, Cheltenham Borough Council has bought land on which it will build a cyber business park near GCHQ. The council borrowed £37.5m to spend on 45 hectares which will also be used for up to 3,000 new homes. The £650m cyber business park project has been developed in partnership with Tewkesbury Borough Council, Gloucestershire County Council and the Gloucestershire Local Enterprise Partnership. The cyber business park will benefit from a £22m project designed to ease congestion by widening the Arle Court Roundabout and increasing capacity at J11 of the M5. Further plans include adding extra lanes past GCHQ and improving cycling and pedestrian access from Cheltenham Spa railway station.
Also on interventions, and highlighting the problems which can occur when the state gets involved in energy businesses, Bristol City Council owned Bristol Energy lost c£10m last year. Bristol Energy was set up in 2016 to provide ethically sourced, low-cost power and return a profit for Bristol taxpayers; instead the venture has so far soaked up £37m of public funds.
The last-minute cancellation of the Boardmasters festival amid storm warnings is set to cost the Cornish economy an estimated £45m. The annual festival takes place over five days, attracting over 80,000 unique visitors and generating 240,000 visitor days. The lost event’s revenue and supplier spend supports the equivalent of 335 full time jobs within the county.
A report by an All-Party Parliamentary Group (‘APPG’) of MPs which investigates Post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Existing less developed regions like Cornwall, will be joined by Lincolnshire, South Yorkshire, Tees Valley & Durham. These areas would have potentially received at least €500 per head in EU regional development funding over 2021-27 which adds up to an extra £950m.
Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75 – 100 per cent of the EU average, compared to 75 – 90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head qualifying them for ‘transition region’ status. They are East Anglia, East Wales, Greater Manchester, Leicestershire, Rutland & Northamptonshire, Outer London South, North Yorkshire and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, or but €50 per head over the next EU spending round would equate to £560m.
The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Fund. Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated and mesh with other pots like City Deals is yet to be determined.